After the elections, the exchange market entered a period of extreme calm. The dollarization process has slowed down, quite the opposite. The unwinding of dollar positions that served as a refuge in the face of electoral uncertainty has become noticeable.
But in the past few hours, voices have resurfaced warning the government that it should not rest on its laurels in the October elections.
It seems contradictory, but those same voices are warning Louis Kauto against it It is possible that the “summer exchange” will change during the coming summer.
More precisely, starting from mid-January, when the demand for the peso decreases, which is seasonal.
After December which always seems to be a very demanding month of money (payment of bonuses and holidays by employers) and year-end holidays, at the beginning of the new year, This demand for the peso usually decreases.
Martin Redrado was firm on this matter. “Since January 15, the process has been reversed: People go outside. This coincides with the payment of $4.5 billion to private creditors. It is necessary to clarify how it will be paid and how much BCRA will purchase from the reserves; What monetary policy will BCRA follow?The head of the Capital Corporation stressed in radio statements.
Will there be a new intervention for Scott Besant?
If, indeed, demand for peso contracts from mid-January and exchange pressure increases, It is very likely that the exchange rate will return to the ceiling of the range, which today is only 5% lower.
Any winds could bring the price back to the top of the range, which today stands at around 1,510 pesos.
The last time this happened was in September, in the run-up to the election, The US Treasury intervened directly in dollar sales. Their total amounted to 2.1 billion US dollars.
“I have the information Scott Besant will never intervene in the Argentine market again Buying pesos so that the wholesale dollar does not touch the ceiling of the range,” Redrado said.
Economists insist to Louis Caputo: should he accumulate reserves?
Domingo Cavallo also came out publicly to claim this The government leaves its current passivity and begins buying reserves. With the aim of generating confidence and predictability in the market.
“And I am one of those who insist on that It is advisable to start accumulating reserves soon. In my opinion, the complete cancellation of shares and the purchase of reserves should be ordered simultaneously, accompanied by a legislative decision prohibiting the introduction of restrictions on the movement of capital in the future and allowing the use of the dollar as a currency for all functions performed by the peso, especially financial intermediation.” The former minister noted during the transfer.
According to Cavallo, this decision will serve as a “reinsurance” that the process of reducing inflation will be strengthened “without there being another crisis like the one that broke out between last July and August.”
Risks are on the horizon
From economic consulting firm Focus Economics, they released a report on the Argentine economy, setting much the same tone.
“Clarity on a stable exchange rate regime and a general commitment not to apply capital controls, which were partially restored in October to contain the peso’s decline, will be crucial to encouraging foreign investment and turning Argentina into a ‘normal’ economy in the eyes of foreigners,” analysts said.
They stressed that “the risks are many.” “The main reason is the possibility of a catastrophic end to the current controlled exchange rate system, which is causing… “Currency collapse.”
The fall of dollarization
Unlike what happened in previous months, where the Argentines bought a huge sum of 30 billion US dollars, November ended with the dynamic turning 180 degrees.
In banks, they noticed a real collapse in demand for the dollar. At the level of the financial system Total purchases are estimated at approximately US$1,000 million. That’s five October purchases.
In parallel, the financial system estimates that dollar sales will range between $900 and $1,000 million during this month.
If November ends with the same dynamic, we will have to talk about a historical moment: dollar purchases by the retail public resemble sales.